Research Archives 
Daily Insights (HLGeBIZ) - 11-Jul-07
Daily Insights
  • MAHB secures RM9b concession for Istanbul airport.
  • Petdag spending RM500m to expand network of stations to 922 nationwide.
  • Alliance Bank with RM6.6bn cash may return funds to investors.
  • igi slashes rates for postpaid calls to 13 sen per minute; talk of Digi-TdC alliance persists.
  • Padang Holdings wants to expand its treated water supply and concession business in Indonesia by paying RM13m for 85% stake in Indo firm.
  • Favelle receives USD4m order for two units of offshore pedestal cranes.
  • UMW India takes over pipe maker for RM66.8m.
  • Proton-VW talks making progress said Second Finance Minister.
  • YTLP may bid for Singapore gencos being sold by Temasek.
  • Glomac plans RM800m 30-acre township in Pune, India.
  • Comintel awarded RM1m contract from LG Mobile; contract value may grow to RM13m over the next 12-months.
  • US: Wholesale inventories rose a more than expected 0.5%; Bernanke said inflation expectations are "imperfectly anchored"
  • UK: BRC retail sales rose the most since March; trade gap narrowed to the least since Oct 05
  • China: June Trade surplus hit a record $26.9bn, above expectations
  • Singapore: 2Q07 advance GDP estimates surprised with a 8.2% gain

    Investment Research - Lafarge Malayan Cement (HLGeBIZ) - 10-Jul-07
    Price target RM1.90
    We re-initiate coverage on LMC with a HOLD, assigning a DCF-derived price target of RM1.90/share. LMC is Malaysia’s largest cement manufacturer, with a 40% market share.

    Positive outlook for cement pricing
    In the last 12 months the government has: (1) raised the cement price ceiling by 9%; (2) introduced an automated pricing mechanism (APM), based on a cost-plus approach. Coupled with the sector’s oligopolistic/closed market structure and inelastic domestic demand, we believe that these regulatory moves will significantly raise cashflow and reduce cyclical margin volatility for all cement players.

    Still a capital management
    We believe capital management will be a recurring theme for LMC, given: (1) stable FCF of >RM0.10/share; (2) sub-optimal gearing of 6%; (3) minimal capex given 20-30% over-capacity; (4) LMC’s foreign parent shareholder. LMC’s RM0.20 capital distribution to shareholders will be completed in Q307. Post-FY07, we believe LMC can support an annual dividend of RM0.09/share based on 100% payout. However, indicative yields would still be below that for REITS.

    Expect a demand pick-up from 9MP
    We believe Malaysian cement consumption is headed towards a cyclical rebound, given implementation of the government’s 9th Malaysia Plan (9MP) in 2008/09. Domestic cement demand is roughly 10% below its recent 8MP peak in 2003, and we believe it could grow 6% pa over 2008/09.

     Breakfast brief (HLGeBIZ) - 10-Jul-07

    WCT wins RM1.9b Abu Dhabi F1 construction job.
    Alam Maritim wins RM12m AHT charter contract; gets RM600m loan
    PKNS ups offer to RM3.90 for Worldwide.
    Ingress’ auto parts orders from Thai/Indo totals RM 400m; in JV talks to manufacture car components in India
    HSL awarded RM179m job for sandfilling and infrastructure works in Sarawak.
    Emivest buys 25% stake in CBS Tech for RM19m.
    Welli to acquire a stake in Chinese mining, toll and power co.
    CIMB to sell Menara Commerce at estimated RM250-441m.
    Muhibbah/Favco to hold talks with Petronas on RM44b East Coast Corridor.
    Glomac offered more warehouse jobs in Thailand.
    AEON Credit to list on Main Board of Bursa.
    Ho Hup to sell 3 pieces of land for RM23m.
    Nextnation receivables surge to RM 67m.
    Government reverses Bernas rice price hike.

    Breakfast Brief (HLGeBIZ) - 9-Jul-07

  • Muhibbah wins RM1.1bn Malaysian road job.
  • Developer of Dubai projects terminates PECD’s contracts worth RM270m.
  • TM may return surplus cash to shareholders after amassing RM5bn in funds.
  • Khazanah offers cash for IDR land to KPRJ.
  • HWGB ceases its loss-making casino in Cambodia.
  • L&G to launch mixed housing project in Selangor.
  • Kulim to acquire more oil plantations overseas, following Indonesian disposal.
  • Sources say YTL’s Singapore-KL bullet train facing opposition over proposed
  • RM1bn in annual subsidies from the government.
  • Glomac expects 30%-40% overseas revenue contribution in 5 years, from India and Thailand.
  • Nestle invests RM100m capex into Selangor facility.
  • US: Non-farm payroll gained better than expected; unemployment rate held steady at 4.5%
  • Japan: Machine orders accelerated to increase a better than expected 5.9% MOM

     Muhibbah Engineering (HLGeBIZ) - 9-Jul-07
    New RM1bn job; maintain HOLD
    News: Muhibbah wins RM1bn Malaysian construction job
    Muhibbah has won a RM1.1bn job to build the 43km South Klang Valley Expressway (SKVE) from its concessionaire SKVE Holdings. The project will take 42 months to complete.
    Impact: Raising EPS by 13%, raising PT to RM7.80
    We raise our FY08-09 EPS forecast by 13%, and our target PE-derived price target by 10% to RM7.80. By our estimates, Muhibbah’s construction order book now stands at RM2.4bn, post-SKVE, 30% overseas.
    Key considerations for the SKVE job are: (1) the project was won on a tender basis, which suggests low margins; (2) previous media reports on the SKVE concessionaire suggest that a portion of work will go to Bumiputra class F contractors; (3) it is not clear whether SKVE has finalized its debt-raising program, which could determine the pace of billings at Muhibbah.

    Breakfast Brief (HLGeBIZ) - 5-Jul-07

  • RM1.2b Penang Outer Ring Road concession to be signed by end August.
  • BAT to increase cigarette prices between 60 to 80 cents for a 20-stick packet today.
  • Petra’s unit to purchase one new unit offshore support vessel for RM49.7m.
  • Maxis, TM may be spared from cutting stakes in Indonesian units. Boustead to raise stake in Royal & Sun Alliance to 80% for RM148.4m.
  • LPI Capital posted marginal rise in Q2 net profit of RM15.21m.
  • Top Glove Q3 net profit jumped 22% to RM25.9m.
  • MAA sees 10 possible suitors for composite insurance unit.
  • Sabah eyes RM2b new investments.
  • Tabung Haji to pull out of Megan Media.
  • Petronas and Viet partner find offshore oil off Vietnam’s southern coast.
  • Pantech to sell Johor industrial land for RM1.75m.
  • National Timber Industry Policy at final stage.
  • Malaysia: Exports grew 2.7% YOY, more than doubling the expected pace
  • Eurozone: June PMI services index strengthened to 58.3, in line with forecast
  • Eurozone: May retail sales surprisingly fell 0.5% MOM
  • UK: June consumer confidence fell 4 points to 95, marking its 1st decline in 6 months
  • UK: June house price inflation rose 0.4% MOM, reaffirming lingering inflation pressure
  • UK: June PMI services climbed to 57.7, its best reading in 5 months

     PLUS Expressways (HLGeBIZ) - 5-Jul-07
    HOLD; switch to LITRAK

  • Price target RM3.40
  • Acquisition of ELITE and LINKEDUA EPS-dilutive
  • Slowly improving business conditions over 12 months


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